Order 2011-11-20

Served: November 17, 2011

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17th of November, 2011

Ninety-day Notice of Mesaba Aviation, 

Inc., and Pinnacle Airlines, Inc., to 

terminate service at: 

Alpena, Michigan

under 49 U.S.C. 41731 et seq. 

Docket DOT-OST-2009-0300

ORDER REQUESTING PROPOSALS 

Summary

By this order, the Department is re-soliciting proposals from all interested carriers to 

provide subsidized essential air service (EAS) at Alpena, Michigan. Proposals are due by 

December 5. (See Appendix A for a map.)

Background

By Order 2010-5-18 the Department selected Mesaba Aviation, Inc., d/b/a Delta 

Connection (Delta) to provide 13 nonstop round trips per week between Alpena and 

Detroit with 34-seat Saab 340 equipment for $1,532,660 annually through May 31, 2012. 

On July 15, 2011, Delta filed notice to terminate that service at Alpena as well as its 

service at a number of other communities. By Order 2011-9-5, September 13, we 

prohibited Delta from terminating service at Alpena and those other communities and 

requested proposals by October 12.1 In response, we received proposals from Gulfstream 

International Airlines, Inc., and Intrepid International Airlines. 

Gulfstream proposed 18 nonstop round trips per week to Cleveland with 19-seat 

Beech 1900 aircraft, and requested $3,243,009 annual subsidy. Intrepid, which does not 

currently have authority to provide scheduled passenger service, proposed four nonstop 

round trips per week to Lansing, Michigan, with 19-seat Jetstream aircraft and requested 

$911,800 annual subsidy for that service. 

 1 By notice dated October 12 we extended that deadline to October 14. 
-2-

Community Comments

We received comments from the Alpena County Regional Airport, the Alpena County 

Board of Commissioners, the Bank of Alpena, and numerous individuals. Most of the 

comments ignored Intrepid’s proposal and discussed the deficiencies of Gulfstream’s.2

By letter dated September 22, the Alpena County Regional Airport indicates, “We are 

requesting that the Department do everything in its power to hold Delta Air Lines in 

Alpena to fulfill their ‘plan to enhance global connections to small towns and cities 

across the US’ as stated [by Delta] in a letter on April 18, 2008, announcing their plans to 

merge with Northwest.” On November 7 the Alpena County Board of Commissioners 

stated that neither carrier’s proposal would provide the needed level of service or 

connectivity and requested a 60-day extension “so that the newly formed Airport 

Committee would have an adequate period of time to fully investigate an Essential Air 

Service carrier for Alpena County.” 

On November 3, the Bank of Alpena indicated what it saw to be numerous deficiencies 

with Gulfstream’s proposal, and those concerns were echoed by the comments of other 

members of the community. Among their concerns were the need for guaranteed code 

sharing and an integrated reservation system; that a three million dollar award to 

Gulfstream for less service was not a good use of taxpayer money;3 that cancelled flights 

in the more-distant Cleveland would leave passengers with fewer choices in getting 

home; that Gulfstream’s aircraft were smaller and without a lavatory; that Cleveland is 

not an international gateway airport like Detroit with less than half of Detroit’s nonstop 

departures.4 Others noted that Alpena’s enplanements were up two years in a row, so it 

made no sense to select smaller aircraft. 

Decision

We have decided to re-bid proposals for Alpena, Michigan. Intrepid’s proposal does not 

meet the statutory two-round-trip-per-day requirement, and we have serious concerns 

about the subsidy level requested by Gulfstream. We encourage the community to 

complement our efforts during this re-solicitation period to secure additional options as it 

presumably has been doing since Delta first filed its termination notice.

While both the community and Department are dissatisfied with the current options 

before us, we wish to highlight the fact that the sources of our dissatisfactions are 

different. We are concerned that the level of subsidy Gulfstream requests is very high --

more than twice the program average.

 2 As we stated in our letter to the community requesting comments, Intrepid does not currently have 

authority to provide scheduled air service, and its proposal, contemplating a total of four round trips per 

week does not meet basic EAS requirements in 49 U.S.C. 41732. 3 Many of the comments contrasted Gulfstream’s proposal with smaller equipment to Cleveland, a smaller 

hub, to the current $1.5 million contract with Mesaba to Detroit, with larger Saab 340 equipment. Delta 

filed notice because it is retiring those aircraft and the smallest aircraft available to it are much more 

expensive regional jets. Delta only has an obligation to continue to provide EAS until we secure a 

replacement capable of providing reliable basic EAS. 

4 For the month of August, 2011, Detroit had 19,412 departures in scheduled passenger service while 

Cleveland had 7,509.
-3-

The community is concerned that the level of service proposed by Gulfstream is inferior 

to what Alpena currently receives. However, Gulfstream’s proposal meets the statutory 

provisions of 49 U.S.C. §41731 et seq, for providing basic EAS. Under those provisions, 

basic EAS for Alpena requires the following: (1) service to a large or medium hub with 

convenient air service to a substantial number of destinations; (2) 12 nonstop or one-stop 

round trips a week; and (3) twin-engine aircraft operated with two pilots. Moreover, 

Gulfstream’s proposed service meets the provisions of §41733 that set the criteria for the 

Department in selecting a carrier: demonstrated reliability in providing scheduled air 

service, contractual and marketing arrangements with a larger carrier to ensure service 

beyond the hub airport; interline arrangements with a larger carrier that allows for the 

passenger to travel with one ticket, one reservation, and one baggage check in. 

Based on all of the above, we have decided that the best option is to re-solicit proposals 

on an expedited basis.5

Request for Proposals 

Carriers interested in filing proposals for Alpena -- with or without subsidy -- should 

e-mail them to our staff at EAS@dot.gov, no later than December 5, 2011. Our staff will 

then docket the proposals, thereby making them public, and we suggest that each 

applicant serve a copy of its proposal on the civic parties and other applicants. Shortly 

thereafter we will provide a summary of the proposals to the community officials and ask 

them to submit their final comments two weeks later. We will give full consideration to 

all proposals filed in a timely manner.6

Interested carriers should prepare their proposals with every expectation that their initial 

proposals will also be their final and only proposals. We retain the discretion to negotiate 

proposals with carriers when we deem it desirable. In such cases, of course, we will give 

all applicants the same opportunity. We also retain the discretion to reject outright all 

unreasonable or unrealistic proposals and solicit a new round of proposals. 

We are here providing interested carriers with some basic information to serve as 

guidance when they prepare their proposals, but we will not prescribe a precise format. 

We expect proposals to adequately describe the service being proposed and the annual 

amount of subsidy being requested. The applicants can make their own judgments as to 

the level of detail they wish to present; however, they might want to include proposed 

schedules and routings as well as supporting data for their subsidy requests, such as 

projected block hours, revenues and expenses. We strongly encourage clear, welldocumented proposals that will facilitate their evaluation by the affected community and 

the Department.7 

 549 U.S.C. §41734(f) directs the Department, when prohibiting a carrier from terminating service, “to make 

every effort to find another carrier” to provide basic EAS as quickly as possible.

6 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to 

provide EAS without subsidy and we determine that service can be provided reliably without such 

compensation, we do not proceed with the carrier-selection case. Instead, we simply rely on that carrier’s 

subsidy-free service as proposed.

7 In selecting a carrier to provide subsidized EAS, 49 U.S.C. 41733(c)(1) directs us to consider four factors. 

(1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; 
-4-

We request proposals for either two or three round trips a day (12 or 18 a week) with 19-

seat aircraft. We also encourage the community to discuss options with carriers that 

might not meet the technical definition of basic EAS but that may be more cost efficient 

and more preferable from the community’s viewpoint. For example, we would entertain 

proposals with 8/9-seat aircraft and as many as four or five round trips a day (24 to 30 a 

week). Finally, we take note that the community has expressed concerns about Cleveland 

as its hub. As a result, we encourage proposals to other hubs, such as the community’s 

current hub of Detroit, as well as Chicago and Minneapolis, or any other hub that 

provides access to the national air transportation system.

As always, staff will work with the carriers to ensure that service and subsidy levels are

reasonable. However, we would not dismiss any proposal out of hand without first 

consulting with community officials. We encourage any proposal that would 

simultaneously satisfy the community’s needs and minimize taxpayer expenditures. 

Carriers are also welcome to propose more than one service option, if they choose. They 

need not limit themselves to the current service pattern if they envision other, potentially 

more attractive service possibilities -- different hubs or lengths of term -- with subsidy 

requirements that remain competitive. 

In order to assist carriers in making their passenger and revenue forecasts, we have 

included historical passenger data in Appendix B. We note that Alpena is a reasonably 

strong traffic generator for the EAS program, averaging 35 enplanements a day during 

the year ended August 31, 2011, and has been growing.

New Filing Procedures

Carrier proposals should be submitted to the Department with all materials merged into a 

single document. In addition, because the document will be published on 

Regulations.gov, each page should be formatted to be viewed online.

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing 

lobbying activities, drug-free workplaces and nondiscrimination.8 Consequently, all 

 

(3) interline arrangements with a larger carrier at the hub; and (4) community views. In addition, The 

Consolidated Appropriations Act, 2008, Public Law 110-161, provides that when selecting a carrier to 

provide EAS, the Department may consider the relative subsidy requirements, thus codifying a factor that 

we have considered since the inception of the program. Interested carriers should also be aware that our 

general provisions governing EAS will be included in the selection order as part of our authorization of 

subsidy for the selected service. Appendix C of this order contains those general provisions. 

8 The regulations applicable to these areas are: (1) 49 CFR Part 20 – New restrictions on lobbying; 

(2) 49 CFR Part 21 – Nondiscrimination in federally-assisted programs of the Department of 

Transportation – Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27 –

nondiscrimination on the basis of disability in programs and activities receiving or benefiting from Federal 

financial assistance; and 14 CFR Part 382 – Nondiscrimination on the basis of disability in air travel; and 

(3) 49 CFR Part 29 – Government-wide debarment and suspension (non-procurement) and governmentwide requirements for drug-free workplace (grants).
-5-

carriers receiving Federal subsidy to support essential air service must certify that they 

are in compliance with Department regulations regarding drug-free workplaces and 

nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of 

the rate term must also certify that they are in compliance with the regulations governing 

lobbying activities. All carriers that plan to submit proposals involving subsidy should 

submit the required certifications along with their proposals. Interested carriers requiring 

more detailed information regarding these requirements, as well as copies of the 

certifications, should contact the Office of Aviation Analysis at (202) 366-5903. The 

Department is prohibited from paying subsidy to carriers that do not submit these 

documents.9 

Community Comments

The community and the State are welcome to submit comments on the proposals at any 

time. As noted earlier, we will provide a summary of the proposals to the civic parties 

and the State and ask them to submit their final comments approximately two weeks after 

the carrier proposals are received.

This order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY;

1. The Department requests proposals from carriers interested in providing essential air 

service, with subsidy if necessary, by December 5. Proposals should be emailed to 

EAS@dot.gov and be entitled “Proposals to Provide Essential Air Service at Alpena, 

Docket 2009-0300.” Service should be consistent with that discussed in the body of the 

order. Questions regarding filings may be directed to Kevin Adams at 202-366-1047;

2. This docket will remain open until further order of the Department; and

 9 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.
-6-

3. The Department will serve a copy of this order on the mayor and airport manager of Alpena, 

Michigan, Pinnacle Airlines Corporation, Gulfstream International Airlines, Inc., Intrepid 

International, and on the carriers in our service list. 

By:

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document is available 

at http://www.regulations.gov
Appendix A

Map for Alpena and Vicinity

Nonstop Great Circle Miles From Alpena (APN)

CIU, Sault Ste. Marie 92

CLE, Cleveland 267

DTW, Detroit 198

GRR, Grand Rapids 181

MKE, Milwaukee 261

MKG, Muskegon 187

ORD, Chicago O’Hare 305

PLN, Pellston 69

TVC, Traverse City 102
Appendix B

Historical Traffic at Alpena, Michigan (APN)

T-100 Market Report

Year Month Origin Destination O&D

2008 9 649 540 1,189

2008 10 532 553 1,085

2008 11 571 507 1,078

2008 12 522 561 1,083

2009 1 515 452 967

2009 2 493 470 963

2009 3 620 549 1,169

2009 4 443 494 937

2009 5 588 564 1,152

2009 6 671 707 1,378

2009 7 830 849 1,679

2009 8 918 863 1,781

7,352 7,109 14,461

2009 9 649 597 1,246

2009 10 681 658 1,339

2009 11 588 579 1,167

2009 12 532 627 1,159

2010 1 591 454 1,045

2010 2 457 462 919

2010 3 704 660 1,364

2010 4 596 674 1,270

2010 5 571 586 1,157

2010 6 713 759 1,472

2010 7 925 988 1,913

2010 8 1,108 962 2,070

8,115 8,006 16,121

2010 9 736 696 1,432

2010 10 789 729 1,518

2010 11 720 676 1,396

2010 12 720 804 1,524

2011 1 694 591 1,285

2011 2 687 643 1,330

2011 3 1,080 953 2,033

2011 4 824 934 1,758

2011 5 991 993 1,984

2011 6 1,089 1,170 2,259

2011 7 1,315 1,281 2,596

2011 8 1,437 1,277 2,714

11,082 10,747 21,829
Appendix C

Example of General Terms and Conditions for Essential Air Service

The carrier understands that it may forfeit its compensation for any flights that it does not 

operate in conformance with the terms and stipulations of the rate order, including the 

service plans outlined in the order and any other significant elements of the required 

service, without prior approval. The carrier understands that an aircraft take-off and 

landing at its scheduled destination constitutes a completed flight; absent an explanation 

supporting subsidy eligibility for a flight that has not been completed, such as certain 

weather cancellations, only completed flights are considered eligible for subsidy. In 

addition, if the carrier does not schedule or operate its flights in full conformance with the 

order for a significant period, it may jeopardize its entire subsidy claim for the period in 

question. If the carrier contemplates any such changes beyond the scope of the order 

during the applicable period of these rates, it must first notify the Office of Aviation 

Analysis in writing and receive written approval from the Department to be ensured of 

full compensation. Should circumstances warrant, the Department may locate and select 

a replacement carrier to provide service on these routes. The carrier must complete all 

flights that can be safely operated; flights that overfly points for lack of traffic will not be 

compensated. In determining whether subsidy payment for a deviating flight should be 

adjusted or disallowed, the Department will consider the extent to which the goals of the 

program are met and the extent of access to the national air transportation system

provided to the communities.

If the Department unilaterally, either partially or completely, terminates or reduces 

payments for service or changes service requirements at a specific location provided for 

under this order, then, at the end of the period for which the Department does make 

payments in the stipulated amounts or at the stipulated service levels, the carrier may 

cease to provide service to that specific location without regard to any requirement for 

notice of such cessation. Those adjustments in the levels of subsidy and/or service that 

are mutually agreed to in writing by the Department and carrier do not constitute a total 

or partial reduction or cessation of payment.

Subsidy contracts are subject to, and incorporate by reference, relevant statutes and 

Department regulations, as they may be amended from time to time. However, any such 

statutes, regulations, or amendments thereto shall not operate to controvert the foregoing 

paragraph.

Funds are not currently available for performance under this solicitation beyond 

[DATE]. The Department’s obligation for performance under this solicitation beyond 

[DATE], is contingent upon the availability of appropriated funds from which payment 

for services can be made. No legal liability on the part of the Government for any 

payment may arise for performance under this order beyond [DATE], until funds are 

made available to the Department for performance. If funds are not made available for 

performance beyond [DATE], the carrier will receive notice in writing by the 

Department.

All claims for payment must be submitted within 60 days of the last day of service 

provided under this order